It's Time To Rethink Robert Shiller's Famous Stock Market CAPE Ratiohttp://www.businessinsider.com/david-biancos-cape-ratio-2014-3/comments
en-usWed, 31 Dec 1969 19:00:00 -0500Sun, 02 Aug 2015 17:03:19 -0400Sam Rohttp://www.businessinsider.com/c/5320fc0deab8ea7b47fc4e67An another antonWed, 12 Mar 2014 20:30:05 -0400http://www.businessinsider.com/c/5320fc0deab8ea7b47fc4e67
I prefer the tobin q ratio (Which says that the stocks are overvalued too)http://www.businessinsider.com/c/53206e52ecad04151e2ef2e0AntonWed, 12 Mar 2014 10:25:22 -0400http://www.businessinsider.com/c/53206e52ecad04151e2ef2e0
btw... I hope you got my sarcasm with Bianco's calculationshttp://www.businessinsider.com/c/53206e04ecad049d162ef2e6AntonWed, 12 Mar 2014 10:24:04 -0400http://www.businessinsider.com/c/53206e04ecad049d162ef2e6
based on Bianco's calculations, you would have been TOTALLY fine going into the 2008... Listen, I'm not saying you have to be bearish now, but you probably want to watch your positions and maybe protect yourself by buying put options.http://www.businessinsider.com/c/53206b51eab8eabf1ef972cbdave aWed, 12 Mar 2014 10:12:33 -0400http://www.businessinsider.com/c/53206b51eab8eabf1ef972cb
To make story more accurate please read "Shiller" as "Graham".
(Shiller did a paper to see if Graham's P/E predicted future stock returns...it does, a little. Henceforth the financial media (bozos) have dubbed it the "Shiller P/E". Want to be famous? Take an atomic clock on an aeroplane, leave one at home, when you get back home you will see that they are no longer in synch. publish your result and then CNBC will refer, henceforth to your " Insert your name" Theory of Special Relativity.http://www.businessinsider.com/c/53206992eab8ea7b19f972d6Focushawk72Wed, 12 Mar 2014 10:05:06 -0400http://www.businessinsider.com/c/53206992eab8ea7b19f972d6
Oh no, here we go. The market isn't overvalued...it's the method we've used to calculate long-term market valuation that is now broken. Wall street scrambling like made to explain why it's different this time.
I love to see those that claim it was the financial crisis that skewed the CAPE. If that's the case then why is the U.S. still trading at 25x its CAPE when nearly all of Europe and Asia are trading below 15??? It was a global financial crisis, so why would it not be skewing other global markets?
The CAPE has worked for 100 years and the CAPE has only been above current levels three times in history...1929, 2000 and 2007. I'm not arguing the market is set to crash, but it is very expensive by historical standards.
Furthermore, profit margins are at all time highs. If margins fall then the market will be even more expensive as earnings erode with lower margins. A potential double whammy for the market going forward.http://www.businessinsider.com/c/53205a3eeab8ea8d61f972cfAlec HoagWed, 12 Mar 2014 08:59:42 -0400http://www.businessinsider.com/c/53205a3eeab8ea8d61f972cf
Real simple...use free cash flow per share as the substitute for earnings. Done.